A business enterprise makes significant investments in bringing new products or services to market. New products and services may generate premium prices upon introduction to the market, based on an element of uniqueness or newness. Such premiums often drive business enterprises to innovate and invest in new products and services. With competition, however, the initially high prices erode over time. Such marketplace dynamics cause innovation to occur in cycles.
Given the cyclical nature of innovation and pricing of products, there is a need for executives to be able to assess their enterprise's innovative efficacy and relative health. Innovative efficacy is a measure of measure success in bringing new products to market, how fast new products come to market, and how much new revenue they generate. Relative health is a measure of current relative success between groups of products. Counting the number of new products and services is an inadequate measure for objectively measuring innovative health, because a count of new products does not reflect the marketplace success of a new product nor how long it has been on the market.